Treasury yields ease; Turkey's lira plunges

A street sign for Wall Street is seen in the financial district in New York
A street sign for Wall Street is seen in the financial district in New York, U.S., November 8, 2021. REUTERS/Brendan McDermid
  • U.S. stocks mixed in early trading
  • Dollar dips
  • Turkey's lira plunges on rate cut

NEW YORK, Nov 18 (Reuters) - U.S. Treasury yields edged lower on Thursday as the market struggled with reduced liquidity, while Turkey's lira weakened further after its central bank cut rates.

MSCI's gauge of stocks across the globe was flat, and stocks on Wall Street were mixed.

Cisco Systems (CSCO.O) was down nearly 9% a day after it forecast current-quarter revenue below expectations due to supply chain shortages and delays. It was the latest in a growing list of U.S. companies citing supply chain problems. read more

Investors have been concerned over further increases in price pressures, along with uncertainty over the Federal Reserve's plans for tightening.

Consumer discretionary shares (.SPLRCD) however, were up 1%. That came a day after retail giant Target (TGT.N) warned that high U.S. inflation was putting pressure on profit margins.

The Dow Jones Industrial Average (.DJI) fell 94.72 points, or 0.26%, to 35,836.33, the S&P 500 (.SPX) gained 10.97 points, or 0.23%, to 4,699.64 and the Nasdaq Composite (.IXIC) added 64.71 points, or 0.41%, to 15,986.28.

The pan-European STOXX 600 index (.STOXX) lost 0.48% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.01%.

Earlier, German and French bourses rose to record highs despite big falls in energy stocks.

Yields on benchmark U.S. 10-year Treasury notes were last at 1.58%. They have jumped from a low of 1.415% last week and are holding below five-month highs of 1.705% reached on Oct. 21.

Bond moves may stay choppy, however, as the market deals with reduced liquidity that is likely to worsen during the end- of-year holiday season.

"There has been a pretty notable decline in market liquidity, which I think has been contributing to some of the outsized moves," said Jonathan Cohn, head of rates trading strategy at Credit Suisse in New York.

"The fact that we’ve already experienced some diminished liquidity suggests that this choppiness that we’ve seen can persist."

In the foreign exchange market, the dollar index fell 0.1%, with the euro up 0.33% to $1.1356.

Turkey's lira shed another 3.3% to above 11 per dollar after the central bank cut rates by 100 basis points to 15%, even in the face of inflation near 20% and the Turkish currency hurtling southward.

The lira has lost around 11.5% of its value this month amid President Tayyip Erdogan's renewed criticism of interest rates and calls for stimulus despite the risks. It was last at 10.955, having earlier hit a record low of 11.30 per dollar. read more

U.S. crude recently rose 0.23% to $78.54 per barrel and Brent was at $80.77, up 0.61% on the day.

Spot gold dropped 0.3% to $1,861.68 an ounce.

Additional reporting by Tom Westbrook in Sydney and Marc Jones and Sujata Rao in London; Karen Brettell and John McCrank in New York; editing by Shri Navaratnam, Sam Holmes, Philippa Fletcher and Dan Grebler

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